Bank of Baroda gets board approval to raise up to Rs 8,500 crore equity

Approves extra time for AT1 and Tier-II debt capital issuance

The board of public sector lender Bank of Baroda today approved the bank's plan to raise up to Rs 8,500 crore through common equity shares to support business growth and meet regulatory norms.

 

The Mumbai-based lender would use various modes, including Qualified Institutional Placement (QIP), in suitable tranches up to March 2028 and beyond, as required. This will be subject to applicable statutory and regulatory approvals, the bank said in its filing with BSE. Its stock closed 0.94 per cent lower at Rs 210.7 per share on BSE.

 

The bank’s capital adequacy stood at 15.96 per cent, with Common Equity Tier-I (CET-I) at 12.38 per cent at the end of December 2024. BoB had raised capital via QIP of Rs 4,500 crore during financial year 2021. The two public sector lenders – Dena Bank and Vijaya Bank – were merged with Bank of Baroda in FY21 as part of a banking sector-wide consolidation. The government of India's stake in the bank stood at 63.97 per cent at the end of December 2024.

 

 

Meanwhile, its board also authorised an extension of time up to the end of March 2026 and beyond for raising the remaining capital of Rs 4,000 crore through Additional Tier-I and/or Tier-II debt capital instruments out of the approved Rs 7,500 crore capital-raising plan. This capital-raising plan was approved at a board meeting on July 5, 2024.

 

Rating agency CRISIL, while issuing ratings on BoB’s Tier-II bonds in November 2024, said the public sector lender was adequately capitalised. The bank’s net worth coverage for net non-performing assets (NPA) improved to 18.7 times as on September 30, 2024 (13 times as on March 31, 2024), from 3.5 times as on March 31, 2021.

 

The capitalisation has been supported by infusions from the government in the past. The bank will be able to maintain adequate capitalisation over the medium term, backed by capital support from the government, CRISIL added.